Topic > IPO

With 2011 winding to a close, talk of Facebook’s long-rumored 2012 initial public offering is crescendoing to cacophonous levels. A new report purporting that Facebook is targeting an IPO date between April and June of the upcoming year is adding to the orchestra.

The claws are out for Mark Pincus, chief executive of social game maker Zynga, today. First, the New York Times published a negative story on a potential talent drain at the social game company. Now Glass Door, the career services firm, says that Pincus has a 46 percent approval rating among his employees.

Online gaming firm Nexon is expected to go public on Dec. 6 in Japan, VentureBeat has learned. The company, which was started in Korea and moved its headquarters to Tokyo, is expected to raise $1.28 billion in its initial public offering. [Update: the price was set on Dec. 6. The IPO will be Dec.14]

As a software securities analyst, Richard Davis spends 200 days a year on the road visiting software companies. He goes to public companies such as Oracle and Salesforce.com, but he also visits up-and-coming software companies he thinks will go public in the near future. In his new column, Davis is going to talk about some candidates he thinks may be ripe for the IPO class of 2012 or 2013.

Daily deals site LivingSocial is close to raising nearly $200 million in venture financing, which will value the site at $5 billion, The New York Times has reported, citing unnamed sources close to the matter. Previous LivingSocial investors such as Amazon.com are expected to participate along with new investors, according to the Times.

Social gaming powerhouse Zynga has been the buzz of the blogosphere today and the star of a back-and-forth over whether the startup is being equitable with how it hands out (and possibly takes back) equity to employees.

‘Tis the season for Internet company IPOs. Veteran local business review site Yelp has signed on bankers Goldman Sachs and Citigroup to lead its initial public offering at a valuation between $1 and $2 billion, the Wall Street Journal is reporting.

If you’d told me 5 months ago that I would spend a lot of 2011 studying accounting, talking to businesses and saying bad things about a company that everyone once loved, I never would have believed you.It all started at Floyd’s Coffee in the Old Town section of Portland — which, ironically, was running the very first Google Offer. I had planned to spend the day there to understand what customers thought of Google Offers, how many people came in and how they interacted with the staff. At that point, I’d spent very little time looking at the space. That day, Groupon put out its first S-1. The company is now poised to go public tomorrow with an initial share price of $20.The first analysis I read, by a supposed expert in the local space, raved about the company. He essentially pulled all of management’s talking points and put them in the story. I knew the company was nowhere near as good as the picture he painted, but I didn’t know how bad it would turn out to be.Five months later, I’m more convinced than ever that this is a terrible company for investors, small businesses and ultimately for consumers. Unless the company substantially changes its business model, investing in Groupon will be like investing in a leaky bucket.Among the significant challenges I see:The daily deals business is past its peak. The best days for the classic Groupon are in the past. With its 3Q results, Groupon has largely proven that once it slows spending on marketing, growth stops. In its most established markets, Groupons sold are down more than 10%. In Boston, the number of merchants featured in 3Q is down a whopping 20 percent. Some look to Asia for expansion, and sure, Groupon can expand there. But the share of revenue it gets to keep in Asia is substantially lower than in the U.S. and Europe.The only area where Groupon seems to be able to innovate is accounting practices. New product lines like Groupon Getaways and Groupon Goods are retreads of long-established e-commerce categories. Groupon’s entries in these categories show zero innovation. In many cases, they are turning back the clock 10 years. In 2011, I shouldn’t have to call to make a hotel reservation.The future is all about targeting and self-serve. Smart businesses don’t want to blast a spam message to everyone in a region who might want a cheap massage. If I ran a spa, I’d want to reach people within 5 miles of my business who weren’t already customers and who regularly spend money on spa services. I want qualified customers, not those who are “once and done.” And I certainly don’t want to discount to people who would pay full price. The Groupon daily deal model doesn’t support this. Once you target to this level, the volume and revenue on each deal is too low to support a sales force. The Groupon army that some people view as a moat will turn out be an anchor.The future is mobile. People will search for, purchase and redeem offers on mobile devices. Google and Facebook have a huge advantage in mobile. They already have hundreds of millions of people using their apps. Although Groupon Now is an OK product, it has little distribution. To be a player in this space, Groupon would have to buy distribution. It will essentially have to pay to re-acquire customers. Then it has to hope that those people will change their usual behavior and go search in a separate app. Google’s launch today of its Android Offers app should terrify Groupon investors. Google could include Offers as a pre-load in Android. Or it could surface the offers into Google Maps — something that people already use.The management team seems to be incompetent. They made up new accounting metrics. They ignored quiet period rules. They used a restaurant in their roadshow as a reference, apparently without checking to see if the restaurant would say positive things. (The restaurant didn’t.) Management told employees they could sell on the day of the IPO. (They can’t.) They asked me to name confidential sources in exchange for access to the Groupon building.All of that said, I’ve put in my request with my broker for shares in the IPO because Groupon has scientifically engineered its IPO to inflate share prices. Its float is one of the tiniest in the last decade. Most likely this thing will have a nice pop tomorrow.If Groupon’s stock skyrockets tomorrow, it doesn’t mean I’ve been wrong about the company. But in the unlikely event it tanks, it’s a big sign that I’m right. (I realize that this might sound like the kind of thing that Groupon’s accountants would say, but it’s true.) We’ll need to wait at least 9 months to really know.Maybe Groupon will find a real business model in that time.I’d like to thank a few people whose help has been invaluable in all of my Groupon coverage: Jonathan Gaw, Ed Ketz, Mark Rogowsky, Brian Roemmele, Conor Sen, Semil Shah and Rick Summer. They’ve read early drafts, provided valuable insight into areas that I’m not an expert in and helped to keep me in check.On the media side, I’d like to thank Dylan Tweney, Heather Kelly and Mo Marshall at VentureBeat; Herb Greenberg and Juliet Mendez at CNBC; Emily Chang, Cory Johnson and Diane Anderson at Bloomberg West; and Erick Schonfeld at TechCrunch.Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org and tweets at @rakeshlobster.Here’s a video of Agrawal discussing the Groupon IPO on CNBC.This story originally appeared on Agrawal’s blog.Top photo: Don DeBold/Flickr.Related articlesHow Groupon’s accounting changes hide what’s really going on at the company (venturebeat.com)Groupon’s tricky S-1 math (venturebeat.com)Who gets hurt if Groupon collapses (venturebeat.com)Weak technology weighs down Groupon’s sinking ship (venturebeat.com)Groupon will IPO in 2 weeks at an $11.4B valuation (venturebeat.com)When Groupons are bad for small businesses (venturebeat.com)

Groupon shares will be priced at $20 when the company begins trading publicly tomorrow on the NASDAQ exchange under the symbol GRPN, according to AllThingsD, which would value the company at $13 billion.

I have long criticized Groupon’s accounting practices. As someone who has watched the company closely since the it first filed the paperwork to go public (now scheduled for November 4), I have seen how it has continually adjusted its S-1, often in response to withering criticism.

Mark Pincus, chief executive of Zynga, has been out of the public eye for months, mainly due to regulatory restrictions on what CEOs of companies filing for initial public offerings can say in public. But yesterday, he finally got on stage for Zynga’s big games rollout.

Glam Media announced today that it has hired 16-year Apple veteran Jeanne Seeley as its new chief financial officer and executive vice president, a move that likely positions the company for a public offering. Seeley starts work today.

Continued uncertainty about financial stability in Europe and a government deadlock in the United States struck publicly-traded equities on Thursday, sending the tech-heavy NASDAQ index down 3.3 percent and below a technical level of support that might indicate future weakness.

Daily online deals startup LivingSocial might delay filing its initial public offering in favor of a new $200 million funding round, according to a Bloomberg report citing anonymous sources familiar with the matter.

When Wall Street folks mention the “IPO window” most people understand that to mean a period of time when public investors are receptive to buying shares in newly public companies. What many people don’t appreciate, however, is how abruptly that window can fly open or slam shut.

[Update: We’ve just heard from a close source close to the investor syndicate on the pending round, and he said it’s not true the founders are getting a majority of the round. He would not specify details.]